The Real Estate Encyclopedia
What Additional Research do I Need to Conduct Before Investing in a REO?
Category - Home Buying Questions - General Home Buying FAQ's

Have your agent request all pertinent documentation from the bank handling the foreclosure.  Typically, the bank provides extensive documentation containing legal language describing any rights or the lack thereof to disclosures, inspections, etc., governing a foreclosed property.  An investor should always check Liens and local property values and do their homework on Foreclosures. 

Although banks want to sell foreclosed properties as soon as possible, they price the property very close to the actual local market value and may not be as willing as would be expeted to negotiate the price down.  Often banks will review several offers and come to an agreement with the highest bidder.  You must know the value of comparable homes in the area and visit the property to establish the condition it is in.  Many foreclosed borrowers  tear out any item of value before leaving the property.   

Even though buying a foreclosed property may sound like a good deal, you need to do plenty of research before finalizing the purchase agreement. Otherwise, you may end up with a house that is not worth what you paid, or worse, more liability than you bargained for.

 
Category(s)
Mortgage Questions - Foreclosure & REO FAQ's
Home Buying Questions - General Home Buying FAQ's
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